House of Lords - European Union - Twenty-Sixth Report

Select Committee on European Union Twenty-Sixth Report

CHAPTER 3: THE EU'S RELATIONS WITH THE KEY PLAYERS IN THE POLITICAL PROCESS

21. Despite extensive trade and economic relations, the EU is not seen by Israeli governments as sharing the same capacity to defend their core interests as the US. (Q 58, Lord Patten Q 363). Israel enjoys a stronger political relationship with the US than with the EU, with a set of bilateral influences that constitute a two-way street: of Israeli influence over US public perceptions of the Israeli-Palestinian conflict, as well as extensive US support for Israel's strategic interests. In the 1990s, the EU's financial and technical support for the development of the Palestinian Authority and economy gave rise to a widespread perception amongst Israelis, but also further afield, that European governments were biased towards Palestinian interests. In the context of the Association Agreement concluded between Israel and the EU under the Euro-Mediterranean Partnership, a number of bilateral trade disagreements over rules of origin further aggravated Israeli-European tensions in the 1990s.

22. The demise of the Oslo process and the advent of the Quartet (See Chapter 4) have begun to change this. The Israeli Ambassador to the EU, Dr Oded Eran, told us that the Quartet allows for greater coordination when "[it] is very important not to send to the parties in the Middle East different messages and create different expectations" (Q 300). The Ambassador also noted the recent and "positive" development of the EU's High Representative Dr. Solana being tasked to continue the dialogue with Syria on behalf of the whole EU (Q 301). Sir John Sawers, then Political Director of the FCO, had a positive view of the effects on Israel of the EU's role in the Middle East peace process which has "led to a greater degree of trust on the Israeli side as well as on the Palestinian side that the European Union has an important voice and has a role to play" (Q 10).

23. The reluctance of the Israeli government to re-engage in direct negotiations with the Palestinians pre-dated the election of the Hamas government in 2006; even with a Fatah-led Palestinian Authority and the election of Mahmoud Abbas to the Palestinian Presidency in 2005, Israel's support for the 'Road Map' was marred by suicide bombings against Israeli targets, and continuing rocket attacks from Gaza on Israeli residential areas that followed the withdrawal of settlers from Gaza in 2005 (Ambassador Eran, Q 292). A number of witnesses (e.g. Yossi Mekelberg, Q 41) also noted the weakness of the current Israeli government and the dramatic drop in public support resulting both from its own internal difficulties, relating to allegations of corruption, and to the set-backs in the war against Hizbollah in Lebanon in the summer of 2006 and the findings of subsequent public inquiries.

24. This places the EU in a difficult position in terms of finding ways to bring the Israeli government back into the MEPP. The first fear is that Prime Minister Olmert's coalition government can neither marshal sufficient cross-party support to build a consensus over re-engaging in peace, nor deliver on its results, despite apparent Israeli (and Palestinian) public support for a two-state solution[3]. The second is that, following the abandonment of the policy of former Prime Minister Ariel Sharon of unilateral withdrawal from the West Bank, which was to follow on from Gaza, there is little appetite in the Israeli public to engage in risk-taking over their own security and to face the consequences of withdrawing a far larger number of settlers from the West Bank than from Gaza.

25. Officially, the Israeli government shared the EU's commitment to the Road Map, provided that the Palestinian National Unity Government (NUG) accepted the Road Map and the three conditions set by the Quartet (Ambassador Eran, Q 293) (see Box 8, Chapter 4). In the absence of this, and in an agreement brokered by US Secretary of State Condoleezza Rice in February 2007, Prime Minister Olmert agreed to bi-weekly meetings with Palestinian President Mahmoud Abbas to discuss technical and practical aspects of coordination, but not the parameters for a settlement. Like the EU, the Israeli government was waiting for clearer signs that the NUG was committed to the three Quartet conditions, and that Mahmoud Abbas could represent all Palestinians, divided as they are over the issue of whether the two-state solution envisaged under the Road Map is the desired outcome of peace negotiations (Ambassador Eran Q 293).

26. We believe that the EU needs to explore more imaginative ways of re-engaging the Israelis in the search for peace. EU policy contains a clearly stated position calling on the Israeli government to take "further steps, including the freezing of settlement activities and dismantling of settlement outposts and Israeli abstention from measures which are not in accordance with international law, including extra-judicial killings and collective punishment."[4]

27. One reason for the lack of consistency in following up its policy position is that internal EU divisions and the diversity of the EU's bilateral relations with Israel have diminished the impact of the EU's common positions, and EU pressure on the Israeli government to comply has rarely been followed up. According to former European Commissioner Lord Patten of Barnes, the EU's experience is that it has few political levers to apply to Israeli governments or Israeli public opinion that will not be undermined by "at least some members of the US administration encouraging Israeli politicians to think that there is no political cost for vetoing any movement towards the Arabs" (Q 363).

28. Witnesses, especially from Arab States, nevertheless argued that the EU's credibility and influence over the MEPP would be greater if Europeans required the Israeli government to fulfil its obligations under the Road Map—and especially the cessation of settlement activity—at the same time as pressuring the Palestinians to commit themselves to both the Road Map and the Quartet principles (Q 85). They felt it was also disappointing that the EU had not at that time been pressing the Israelis to transfer the remainder of the withheld customs revenues and taxes to the Palestinian authorities (Q 90) (See Chapter 5). On the first question, Dr. Eran, Israeli Ambassador to the EU, observed that the Israeli government had taken responsibility for removing illegal settlements and hoped that it would implement its decisions on this issue (Q 298). On the second question, he observed that while the Israeli government has never disputed that the revenues belong to the Palestinians, they needed to make sure "that the money goes to positive, constructive causes." In recent months, $100 million and 30 million shekels had been passed to the Palestinian President Mahmoud Abbas, and according to the Ambassador, "the Israeli government would be willing to continue the flow of money to the Palestinian Authority provided that they could create a clear cut mechanism monitoring where the money goes" (Q 293). Following the creation of the new Government under Prime Minister Fayyad the Israelis have announced that money is to be transferred[5].

29. Other witnesses also pointed to the fragility of the investment of the EU in building Palestinian infrastructure, which had been "destroyed during the second intifada by Israel" in the view of the Egyptian Ambassador to the UK, Ambassador Madi (QQ 153, 159). This has not represented good value for European tax-payers (Dr Ahmad Khalidi, Senior Associate member, St. Antony's, Oxford University QQ 65, 66). For Yossi Mekelberg, Head of the International Relations Department of Regent's College London, a course of action based on seeking incentives—for both sides—was more likely to produce longer term results (Q 43).

30. There may be ways in which the EU can engage further with Israel in the absence of the likelihood, or political expediency, of the EU's exercising direct pressure on the Israeli government. One area where the EU's bilateral relations with Israel have improved significantly in recent years is through the development of a much broader set of relationships under the Association Agreement and the activities of the European Neighbourhood Policy (ENP) (Sir John Sawers, Q 9) (See Chapter 5). Dr Jana Hybášková, MEP and head of the Delegation for Relations with Israel at the European Parliament, outlined the unprecedented depth of this extended economic and political relationship. Under the ENP's EU-Israel Action Plan, for example, there was already a working group on counter-terrorism. "Four or five years ago no-one would have thought we could have a common EU/Israeli counter-terrorism working group … We have it now and it works perfectly' (Q 219).

31. The EU could promote more parallelism between this expanded activity and encouraging Israel back to the negotiating table. According to Hugues Mingarelli, Director, Middle East, in the Commission: "we have a number of levers in order to push both partners in certain directions and we will have to use these ENP action plans as soon as we can" (Q 203). For Dr Jana Hybášková, however, this means working more with the Israelis to "tell them that they should care more for the Palestinians and that does not necessarily mean only talking to the Palestinians and telling the Israelis 'you do your own job'" (Q 217).

32. One clear opportunity lies in Israel's decision "slowly but surely" to harmonise its economy in line with the EU's internal market, which includes greater bilateral cooperation with the EU over climate change, the environment and Information Technology where the Israelis have much expertise to offer. The political consequences for this, in the view of Dr Jana Hybášková, will take time and are better constructed in a step by step way, building relations through the individual Directorate-Generals of the European Commission. There is also strong pressure from the Israeli business community to move in this direction. (Q 227)

33. We believe the EU needs to use all the instruments at its disposal. The European Neighbourhood Policy, in particular, offers a promising route through which the EU can work for a deepening bilateral relationship with Israel within the context of steps towards resolving Israel's conflict with the Palestinians. The EU needs to make clear to the Israeli government that there could be opportunities for developing the relationship within the Neighbourhood Action Plan. Conversely, a lack of engagement by Israel in the MEPP would in the long run hinder the process of economic harmonisation and bilateral technical and security cooperation.

The Palestinian Authority

THE RISE OF HAMAS AND THE QUARTET CONDITIONS

34. Hamas (See Box 5 below) came to power in early 2006, winning 74 of 132 seats in the Palestinian Legislative Council (PLC). Mahmoud Abbas[6] had previously been elected as President of the Palestinian Authority (PA) in early 2005, following the death of President Arafat in November 2004. President Arafat's Fatah party had previously formed the government. The EU had strongly supported the holding of democratic elections, but the election result and the formation of a Hamas-led government presented it with a challenge.

35. The EU took a firm position together with its partners in the Quartet (US, Russia, UN), calling[7] for the new government to commit itself to three principles of "non-violence, recognition of Israel, and acceptance of previous agreements and obligations, including the Road Map" (see Box 3 Chapter 2). At the end of March 2006, the Quartet concluded that the three principles had not been fulfilled, and key members called for an international boycott against the Palestinian government. The office of the Presidency of the PA was not similarly treated, and it continued to receive assistance from the EU and other donors.

BOX 5
Hamas

The Islamic Resistance Movement, or Hamas, was founded in 1987 and has both a political and a military wing, the Izz ad-Din al-Qassem Brigade. The military arm has been involved in some of the worst acts of terrorism against Israel but engaged in a unilateral ceasefire ('calm') from March 2005 to April 2007, since when it has renewed Qassam missile attacks against Israel from Gaza. Hamas's Charter of 1988 states that it is a resistance movement committed to ending the Israeli occupation of Palestine. Its popularity stems in large part from the wide range of social, educational and welfare work which it carries out for ordinary Palestinians, especially in its main base in Gaza. As a political party, Hamas participated successfully in the January 2006 elections, winning over half of the seats in the Legislative Council (74 out of 132) which entitled it to form a government. It subsequently formed an important part of the National Unity Government of the Palestinian Authority. There are several groups within Hamas, including its external leadership under Khaled Mishaal, based in Damascus, who also leads and controls the al-Qassem brigade; Hamas's internal political leadership under the Prime Minister Ismael Haniya in Gaza; and a smaller following in the West Bank and in the diaspora. Under the pressure of the international boycott and the tensions, spilling into violence, with the former governing party, Fatah, there are increasing indications that Hamas has split into radical and less radical elements, subject to only limited central controls.

36. The boycott of the Palestinian government has in practice been implemented in different ways by the international community. The EU suspended all contacts with the government and halted aid transfers to the government's Single Treasury Account—an account of the Ministry of Finance at the Arab Bank through which all the PA's revenues and expenditures are channelled, and which is monitored continuously by the IMF[8]. The EU also suspended other forms of assistance, such as the Coordinating Office for Palestinian Police Support (EUPOL COPPS) (see Chapter 5). However, the EU had already suspended direct budgetary assistance to the government before the election due to concerns about the use of funds, corruption and maladministration under the previous administration. (Q 26)

37. Although the EU position has been quite closely aligned with the firm approach taken by the United States, the EU has been more pragmatic and was less keen on trying to force Hamas out of government. The EU encouraged Hamas to accept the Quartet principles, in particular by holding out the prospect of a resumption of direct financial and other assistance[9]. Moreover, the United States went further than the EU by announcing it would blacklist any bank that continued doing business with the government. As a result, Hamas resorted to bringing millions of dollars in cash into the Palestinian territories in suitcases[10]. Arab and Islamic states dealt with the problem either by depositing funds in an Arab League account in Cairo or by sending their money to the President's office.

THE DETERIORATING SITUATION IN THE PALESTINIAN TERRITORIES

38. The boycott has had a serious effect on the finances of the PA government, which faced severe difficulties, although Robert Cooper of the Council Secretariat offered a word of caution on this point. "I do not have the impression that there is really a shortage of money in this area" (Q 259). However, the severance of international aid is just one factor contributing to a crisis which is having a devastating effect on the socio-economic fabric and on the human rights situation in the Palestinian territories. The steep rise in poverty has been matched by an unravelling of social cohesion and a rise in crime and internal violence. As the Egyptian Ambassador to the UK said "They have no present to live or a safe future to think about for themselves and their families." (Q 164)

39. The underlying reason for the crisis is the occupation ("Israel's closure regime has a devastating effect on the Palestinian economy"[11]) and the partial suspension of the transfer of taxes and customs duties which Israel collects on behalf of the PA. (Q 255) In normal circumstances, this is the PA's most significant source of revenue, amounting to the $50-60m a month. However, unlike international aid, these withheld funds belong to the Palestinians, and the EU has consistently called on Israel to release the outstanding amount. The problems of internal security resulting from the occupation deter potential overseas investors, including those from the Palestinian diaspora.

40. We are gravely concerned about the security, human rights and socio-economic situation in the occupied Palestinian territories. It is becoming evident that the Quartet approach contributed nothing to ameliorate the crisis.

41. The EU should engage more urgently and consistently with the Israeli government to persuade them to transfer the remainder of the withheld Palestinian tax and customs revenues to the Palestinian authorities in a way that benefits all Palestinians[12].

THE THREE QUARTET PRINCIPLES

42. Progress on the three Quartet principles by the NUG was very mixed. Whilst there were some positive signs on respect for previous agreements and recognition coming from the National Unity Government (NUG) and its main coalition partner, Hamas, non-violence continued to be a major stumbling block. This was despite Hamas' unilateral ceasefire from March 2005 to April 2007 (see box 5 above on Hamas).

43. It appears that Hamas saw terrorism and violence as a legitimate strategy to resist Israeli occupation as the breakdown in the ceasefires in May 2007 showed. This was a major obstacle to the peace process. While members of Hamas participated in government, the movement had an even greater responsibility to respect the democratic institutions by which it came to power. There is a contradiction between claiming democratic legitimacy while committing acts of violence, whether against Israel or rival factions.

44. A distinction has to be made between a commitment by the NUG to non-violence, and its effective implementation by the politicised state apparatus and the various factions of which the governmental coalition were members. The government did not have full control over the multiple security forces operating on Palestinian territory due to the weakness of the Palestinian administration. Therefore, achieving an effective end to violence required further efforts to build the cohesion and accountability of the Palestinian security forces, work which has been severely hampered by the boycott. (See Chapter 5)

45. We believe that the European Union's support for a Palestinian coalition government, including Hamas, could not have been unconditional. To require that a Hamas-led government not only renounce attacks on Israel but use its governmental authority to prevent such attacks by others was entirely justified.

46. However, the EU should not allow the peace process to be held hostage by any faction, individual, or state. The history of the Middle East is scarred by peace initiatives that have been derailed by extremists on both sides. Although each situation is different, recent experience in other situations, such as Northern Ireland, can serve as a source of inspiration and valuable lessons on how to bring into the peace process individuals and movements who previously espoused violence and how to avoid the process succumbing to acts of violence.

47. We believe that the EU's objective should be to attempt to maintain a peace process that is as inclusive as possible, while firmly rejecting attempts by outsiders and extremists to derail it. Dialogue with the key parties is an essential aspect of the peace process, and channels of communication should as far as possible be kept open.

48. The approach taken by the EU on the Quartet principles is not beyond criticism. The requirement that the NUG should recognise Israel seemed to amount to a pre-condition for peace talks. This represented a significant change of approach from previous international efforts to broker a peace and was undoubtedly seen by Hamas as expecting them to concede an important point before any progress on substantive issues was guaranteed. Hamas regards recognition of Israel as the object of the peace talks themselves, rather than a condition that can be met prior to discussions.

49. We are also concerned that the notion of recognition is ambiguous and has led to some misconceptions. Under diplomatic practice, it is states which undertake acts of recognition, not non-state entities. Robert Cooper told us that this was "an area of great ambiguity" and that recognition in the formal sense is not what is at stake so much as "people accepting that there is going to be a state called Israel." (Q 236) This interpretation is very much in line with the EU's call for Palestinian factions to "recognise Israel's right to exist"[13].

50. The NUG did not formally accept this principle, but made some important moves. Firstly, by signing the Mecca agreement Hamas committed itself to respecting legitimate Arab and international resolutions and agreements signed by the PLO. This went a considerable way towards fulfilling the third principle concerning previous agreements and would "de facto mean a recognition of Israel […]" in the view of David Quarrey at the FCO. (Q 17) Secondly, the acceptance by the Palestinians of the Arab Peace Initiative at the summit of the Arab League in 2007 showed a willingness by the NUG to recognise Israel as part of a peace settlement.

51. The requirement that the Palestinian government accept and respect positions established collectively by the Arab side, most recently at the Arab League Summit in Riyadh, is entirely justified. But conditions about the formal recognition by Hamas of the state of Israel amalgamate elements of any final status negotiations with the preliminaries to such negotiations. We believe that the interpretation of the conditions set by the Quartet was undesirably rigid and we would urge the Government and the EU to reconsider the precise formulation of any conditions and to apply them in future with a reasonable amount of flexibility.

52. Although the boycott may have pressured the government and Hamas into some concessions on the three principles, this meagre progress has come at a price. Among its greatest failings is that it has reversed progress on building Palestinian capacity and institutions. According to Robert Cooper, the Palestinian administration is in extremely poor shape and he admitted that "there is a risk of a failed state." (Q 254) The violence in Gaza in May 2007 and the resignation of the Minister of the Interior pointed to a further deterioration of the situation. A further negative consequence of the boycott has been that it has focused international attention on Palestinian commitments, thereby diverting attention from Israel's failure to implement key aspects of its own commitments and respect international law.

53. There were signs that the EU was rethinking its approach. Following the EU Council meeting of the 14 May 2007, the Commissioner for External Relations Benita Ferrero-Waldner was reported as having assessed that there were "positive movements" with regards to lifting the sanctions. FCO Minister Kim Howells and David Quarrey confirmed that the EU was committed to the Quartet principles, but that the assessment of whether they were being fulfilled would be based on a careful consideration of the NUG's policies and actions, including its "direction of travel." (Q 331) The EU was assessing whether and how to engage with the NUG. Hugues Mingarelli of the European Commission set out the three main scenarios: full engagement with the NUG, assuming the three Quartet principles are met; selective engagement with Ministers who commit to the three principles; or a continuation of the boycott. (Q 184)

54. The EU seemed to prefer the second option, with Commissioner Ferrero-Waldner meeting on 11 April 2007 with the then NUG Finance Minister Salam Fayyad, who is an internationally-respected figure, to discuss a resumption of direct budget support to the finance ministry. Selective engagement was also UK policy[14]. However, this represents a break from previous EU and Quartet positions which judged the Palestinian government as a whole, rather than its individual members. While engaging selectively had its attractions, such as the possibility of resuming direct financial assistance, it was not without its risks. Selective engagement could create incoherence in the EU's assistance, heighten rivalries and tensions between the factions represented in the government, and weaken the principle of the collective accountability of the government to the PLC[15].

55. Against this background, the United States reportedly provided $59m in aid to the presidential guard of PA president Mahmoud Abbas, essentially for training, equipment and capacity-building, in consultation with Israel[16]. We are concerned that military support for one faction over another heightened tensions in the occupied Palestinian territories.

56. We also believe that the EU should engage in a frank dialogue with the United States on this issue, with a view to ensuring that all aid provided by members of the Quartet improves the cohesion of the Palestinian administration and avoids increasing tensions.

57. We also believe that it is a necessary condition for any peace settlement between Israel and its Arab neighbours that there should be a Palestinian Authority capable of fulfilling any responsibilities it has accepted under such a settlement. It should also be able to provide stability and good governance within the Palestinian party to a two-state solution. Accordingly, the European Union needs to keep that ultimate objective firmly in mind at every stage of its dealings with the Palestinians and Israelis and the wider international community; and to concentrate its efforts on moving towards that objective. The provision of emergency humanitarian aid by the EU must not conceal the need to move as soon as possible to a situation where the EU's resources go directly to properly constituted Palestinian governmental institutions.

58. The present situation on the ground is far removed from the stated objective of creating a viable Palestinian state. But the "Mecca agreement" between Hamas and Fatah brokered by the Saudi government offered the possibility of a first step along that road. The European Union needs, by its statements and its actions, to encourage further progress along these lines.

Relations with the United States

59. The EU's key relationship with the US on the Middle East Peace Process remains their common membership of the Quartet, and the Quartet has been a catalyst for maintaining a regular and intense policy dialogue with the US, from the level of Secretary of State downwards. In theory the four partners (US, Russia, UN, EU) are equal within the group, each playing a complementary role. But it is not possible to determine exactly the weight of any partner relative to the others, nor to what extent the EU and US are working together. Moreover we heard few references to the roles of Russia and the UN. The perception is that the US dominates the political agenda. David Quarrey of the FCO however felt that it would be "unfair to say that the EU merely signs up to whatever line the US wants to take in the Quartet" (Q 341). In Chapter 4 we describe the way in which the EU is often one step ahead of the US, leading the way in the Quartet.

60. A key perception, and reality, is that the US, and Israel, prefer the EU to play a subordinate role in any peace process (See Chapter 3, paragraph 21) Yossi Mekelberg, an academic specialist on Israel, thought "the way it is seen … the Palestinians want a stronger EU around the table … the Israelis do not want a stronger one" … "politically Israel prefers to see the US as the main broker" (QQ 54, 58). He felt, however, that events in Lebanon, with the deployment of European troops on the ground, had changed perceptions slightly in Israel (Q 58). Conversely the EU seems more comfortable than the US in speaking to countries such as Syria and Iran. Dr Ahmad Khalidi, an academic specialist on Palestine, also saw a dual role for the EU both in engaging the Arab States and in acting as a bridge between the Arab States and the US (Q 64).

61. The US's (Dr Rice's) recent readiness to discuss "political horizons" has opened the way for the EU to explore paths beyond the Road Map without necessarily confronting the US. In addition, the US did not immediately reject the establishment of the National Unity Government containing Hamas ministers and with Dr Rice's visits to the region is currently showing more flexibility in handling the problem.

62. As far as aid is concerned, the Americans seem to perceive that EU/US cooperation on the ground works well in the main, assisted by the EU Special Representative for the Middle East peace process, Mark Otte. However, Prof. Robert Springborg of the London School of Oriental and African Studies thought the Americans preferred to "go it alone". "There is very little coordination on the ground between the Americans and anyone else that I can diagnose … There is no attempt to co-ordinate their projects with the Europeans or the European Union … At the highest level the Americans tend to pursue matters independently and that translates into activities on the ground that are seen [as] … very much a relationship between America, Israel and Palestine, not between America and the other donors who are engaged." (Q 137)

63. We believe that a key role for the EU in the EU/US relationship is to press upon the US the importance to the future of the region of its sustaining an active, balanced and consistent interest and engagement in the MEPP, and supporting the Palestinians as well as Israel in achieving the two state solution. In pursuit of this objective, the EU and Member State governments should give their full support to their parliamentarians, in making full use of existing relationships and in increasing links to explain and discuss the European position with their counterparts in the US Congress.

The Regional Dimensions—changing dynamics

64. One of the most significant changes over the past few months has been the greater activity of a core group of Arab states, led by Saudi Arabia. While the Saudis have given financial support to the Palestinians over a number of years, their political support for the MEPP has been constrained by their lack of direct diplomatic relations with Israel and a tacit acceptance, at least for the duration of the Oslo process, that the US was in charge of brokering the main peace negotiations.

65. Following the collapse of the Oslo process, and in response to the increasing unilateralism of Israel, the Saudi government, and the then Crown Prince Abdullah in particular, were responsible for gaining Arab League support for a two-state solution, in the form of the 2002 Arab Peace Initiative. This was re-visited in early 2007 as part of the Arab effort to support the Mecca agreement between different Palestinian political factions to form the National Unity Government, which was brokered by the Saudis in February 2007.

BOX 6
The Arab Peace Initiative

The Arab Peace Initiative was initially launched in 2002 and re-endorsed by the Arab League at the Riyadh summit of late March 2007. The main basis of the Initiative—which was acknowledged, but largely ignored by the US, EU, Russia and the UN on its launch—was an offer to Israel of full normalisation of relations and comprehensive security guarantees by all those Arab League member states who had not already done so. This would include Syria which had been long opposed to a normalisation of relations with Israel. In return, Israel would withdraw to the pre-1967 borders and from the Golan Heights (part of Syria)—the so-called "land for peace" bargain. The Initiative also changes the emphasis from previous processes (Oslo, and the Road Map), in which both Israelis and Palestinians undertook to fulfil undertakings in a nominally coordinated and simultaneous fashion. In this case, it is Israel that will be rewarded with a comprehensive and regional 'normalisation' on completing its withdrawal.

An informal group of the Saudi, Egyptian, Jordanian and United Arab Emirates (UAE) governments, (sometimes termed the 'Arab Quartet' by outsiders) initially provided the impetus for the renewed initiative of 2007, but the Arab League has now given the leading role to Egypt and Jordan to take the initiative forward, as the only governments having diplomatic relations with Israel.

66. Israeli reservations notwithstanding, it is a sign of the changing regional climate that the government of Ehud Olmert expressed "some interest" in examining the Arab initiative further. The Israeli Ambassador to the EU, Dr Eran, however maintained that Israeli concerns over the Arab League's continuing support of the right of return of Palestinians to Israel as well as Gaza and the West Bank continues to render the initiative unacceptable to Israel as a framework for renewed peace negotiations. (Q 294)

67. A number of other witnesses attributed the more active role of Saudi Arabia, Egypt and Jordan to their wider regional concerns about countering Iranian influence, especially following Israel's attacks against Hezbollah during the summer 2006 war in Lebanon, and, to a lesser extent, their concerns about Sunni-Shi'a relations (QQ 92, 133).

68. An additional set of reasons has been the effect of Hamas's electoral victory in 2006 combined with the US failure in Iraq which has moved the Saudis to assume a leadership role in the region and to defy US prohibitions—for example in receiving members of Hamas, above all the Hamas leader-in-exile, Khaled Mishaal—in the course of brokering the Mecca agreement, and in making direct contacts with Iranian officials prior to the US's own change of approach to Iran over Iraq, in seeking ways to resolve the continuing governmental crisis in Lebanon.

69. A more direct and obvious objective has been the attempt to draw the Syrians fully back into the fold of the Arab League, from which the Assad regime has been isolated in recent years. The Saudis' underlying fears that Syria will be further absorbed into Iran's sphere of influence have been compounded by the US administration's reluctance to engage with the Syrian Government on policy matters because of the Assad regime's alleged support of terror (above all in supplying arms to Hezbollah) and the still unresolved UN investigation into the Syrian role in the assassination of former Lebanese Prime Minister Rafiq Hariri in 2005. (See the Lebanon section paragraphs 77-82).

70. We acknowledge the importance of the diplomatic energy and commitment to reviving the MEPP demonstrated in recent months by Saudi Arabia and other Arab League states, and the facilitating role played by Saudi Arabia in the formation of the Palestinian National Unity Government as having been one of the most helpful developments in recent months. While it is premature, and perhaps unwise, to focus too closely on the machinery and form that the new, and unprecedented, engagement of the Arab states in the MEPP will take, the EU and other members of the Quartet should take seriously and encourage the renewal of Arab regional leadership. Recent initiatives, such as the designation by the Arab League of Egypt and Jordan as the League's interlocutors with Israel and the Palestinians in the MEPP, should be fully supported by the EU.

SYRIA

71. Syria is important to any resolution of the Israeli/Palestinian dispute. It has its territorial dispute with Israel over the Golan Heights, which Israel has occupied since the 1967 war. One of the key questions is whether Israel's withdrawal from the Golan Heights should be an integral part of any comprehensive peace settlement, or whether this issue should be dealt with separately from any negotiations between Israel and the Palestinians. Syria also remains an influential player in Lebanon, another of Israel's neighbours, which, despite the withdrawal of Syrian military forces from Lebanon in 2005, continues to lead to a difficult relationship between the West and Syria. Finally, Khaled Mashaal, the head of Hamas' Political Bureau, and the movement's main overseas representative, is exiled in Damascus and supported by the Syrian authorities.

72. Both the EU and individual EU governments have been open to exploring the possibilities presented by the new regional developments, especially in support of a renewal of the MEPP. Robert Cooper of the Council Secretariat questioned the effectiveness of too many uncoordinated national European visits to Damascus. (Q 263) In recent months, and as a result of closer coordination within the Quartet, the representation of EU interests has been more closely coordinated through the office of the EU's High Representative. The FCO Minister, Dr Kim Howells, thought that Javier Solana would continue his contacts with Damascus in the future. (Q 330)

73. The importance of Syria's role was evident to many witnesses, even though opinions differed over the timing and conditions attached to engagement with Damascus. Lord Patten supported negotiations between Israel and Syria first on the grounds that the main point of contention, namely Israeli withdrawal from the Golan Heights, would be easier for Israel to achieve than addressing the complex final status issues of the Palestinian track and would remove the risk of Syrian interference with Palestinian groups. Moreover, security measures for the withdrawal of the 20,000 Israeli settlers from the Golan Heights and subsequent border management issues had already been well-examined. (QQ 372, 374)

74. Lord Patten believes that President Assad is sincere in his search for re-engagement with the Israelis (Q 372). The irony now is that having sought a Syrian interlocutor for peace in the 1990s, the Israelis are now reluctant to engage. (Q 374) For some witnesses, however, High Representative Javier Solana's recent and public support, whilst visiting Damascus, for the return to Syria of the Golan Heights was seen as neither politically well considered (Q 223) nor something that either Javier Solana, or the EU, could deliver on without the cooperation of Israel. (Q 302)

75. Syria's role in Lebanon is a serious cause for concern. According to the Syrian Ambassador in London, Dr Sami Khiyami, Syrian forces occupying Lebanon withdrew swiftly after the adoption of UN Security Council (UNSC) resolution 1559 of September 2004. (Q 173) However, Syria can influence the political situation in the Lebanon and undermine the independence of Lebanese institutions (Q 96). Other provisions of the resolution, such as the disbanding and disarmament of militias. (which means, primarily, Hezbollah) have not been fulfilled. Syria has been accused of facilitating the supply of arms to Hezbollah across the Syrian-Lebanese border. Syria also has close links to the Lebanese President Emile Lahoud and Hezbollah, which until recently participated in the Lebanese government. Syria's role is all the more important given Iran's ideological and military links to Hezbollah. With the exception of Israel, Syria has exclusive control of access to Lebanese territory by land. If Syria were to cooperate with the international community, Iran's influence over developments in Lebanon could be greatly reduced although not eliminated.

76. We recognise the importance of the EU continuing its engagement with Syria, not least to test President Assad's seriousness of purpose. Syria has clear and legitimate national and strategic interests at stake in the MEPP. Both the Israelis and Palestinians have an interest in ensuring that Syria does not undermine the prospects for peace, either by supplying weapons to support Hezbollah attacks from Lebanon into Israel, or by providing a safe haven and financial support for a Hamas leadership in exile.

LEBANON

77. A regular flashpoint of the conflict, Lebanon is a key part of any overall peace process. Tensions are once-again running high since the conflict of the summer of 2006, in which Israeli forces sought to destroy the Hezbollah fighters in southern Lebanon. The EU has played a greater role in Lebanon since the outbreak of the war, on the basis of the principle that peace in the region depends on a stable situation in Lebanon as set out in the relevant UN Security Council Resolutions (UNSCRs), including UNSCR 1701, adopted in August 2006.

78. Unfortunately the EU was divided over whether to call for an immediate ceasefire following the outbreak of the war. Several Member States supported this proposal as a matter of urgency, but it was resisted by the UK Government. The mounting civilian casualties and developments at the UN eventually led to a change of approach, with the EU calling on the 1 August for an "immediate cessation of hostilities to be followed by a sustainable cease-fire". The destruction of Lebanese infrastructure and the loss of over 1,000 lives caused outrage in many countries in the Middle East. The EU was criticised for being too close to the line taken by the United States, and for failing to uphold international law and protect the victims of the conflict. In the eyes of Arab public opinion, this event damaged the EU's reputation and credibility.

79. Since the cessation of hostilities, the EU's approach to Lebanon has focused on supporting the efforts of the Lebanese Government and the UN, both at political level and through the provision of financial assistance and peacekeeping forces on the ground. EU Member States were instrumental in providing adequate troop strength for the reinforced UN peacekeeping mission, UNIFIL II. According to David Quarrey of the FCO, "it was the strength of the EU's bilateral relations with Israel and the Lebanon last summer which allowed the EU to play the key role in bolstering UNIFIL, which was then the essential pre-condition to achieving the ceasefire." (Q 31) The EU has supported the UN-led process to bring to justice those responsible for the assassination of former Lebanese Prime Minister Rafik Hariri, including through the setting up of the Special Tribunal for Lebanon in accordance with UNSCR 1664. Syria has not supported the creation of the Tribunal, and the Syrian Ambassador cited specific Syrian concerns about its proposed statute. (Q 174) In mid-May, the Lebanese Prime Minister Fouad Siniora made a direct request to the United Nations for the setting up of an international tribunal under chapter VII of the UN Charter, which the UN Security Council has now created by voting a resolution on 31 May 2007 (with abstentions by China and Russia).

80. Lebanon has frequently served as a proxy battleground for regional conflicts, and for this reason it is important that Lebanon should be included in a broader regional settlement. The EU's approach recognises the interrelationships between the conflicts in the region, and achieving a comprehensive peace which brings in all the parties to the conflict is therefore a central goal. The EU has affirmed its "determination to reinforce Lebanon's sovereignty, territorial integrity and independence", and its commitment to a long-term political and economic partnership with Europe. At the Paris international conference on Lebanon held on 25 January 2007, the European Commission presented a new assistance package to help Lebanon achieve crucial political and economic reforms, bringing the EU's total assistance for Lebanon to €522 million since the beginning of the conflict in July 2006[17]. The President of the European Investment Bank (EIB) also announced that the Bank would fund the recovery, reconstruction and reform plan drawn up by the Lebanese Government totalling €960 million over the following 5 years by financing key projects under the Public Investment Programme, and by supporting both private sector activity and public investment under the Bank's Facility for Euro-Mediterranean Investment and Partnership (FEMIP)[18]

81. The EU's relationship with Lebanon was further enhanced by Lebanon's endorsement of an Action Plan under the EU's European Neighbourhood Policy (ENP) on 12 January 2007. The jointly agreed programme is financially supported by the EU and includes provisions on upgrading the scope and intensity of political cooperation, including on issues related to the peace process.

82. For full peace to be restored between Israel and Lebanon, progress is necessary on issues such as Israeli withdrawal from the Shebaa farms, (see Box 7 below) the demilitarisation of southern Lebanon, and the control of the legitimate armed forces of Lebanon across the whole country. (Q 31) Achieving this objective will require the cooperation of Syria. (see previous section).

BOX 7
The Shebaa Farms

Israel occupied, but does not claim, the area known as the Shebaa farms during the 1967 six days war, and it has remained a flashpoint of the conflict with Hezbollah, which uses the continuing occupation of this area by Israeli forces as a main pretext for continuing its armed struggle against Israel. Covering approximately ten square kilometres, the area is disputed between Lebanon and Syria, and is not subject to territorial claims by Israel. It is recognised that the village of Shebaa itself lies in Lebanon, but most of the farms fall into an undefined area in between Syria and Lebanon.

83. We believe negotiations for a comprehensive settlement of the Arab-Israeli dispute must involve Lebanon, whose political stability and viability is a necessary element for progress towards such a settlement. We urge the EU to continue to give full support to the government of Lebanon, including by continuing to support the establishment of an international tribunal to try those suspected of involvement in the assassination of former Prime Minister Rafik Hariri and other Lebanese public figures.

84. The stability of Lebanon requires the continuing absence of hostilities along the country's border with Israel. We urge the EU therefore to give full support to UNIFIL II in its strengthened form and mandate, including the prevention of attacks on Israel from southern Lebanon, and to make clear to Israel that any military action from their side will be met by the condemnation of the international community. Given that the only remaining territorial dispute in the area concerns the Shebaa Farms, and in order to neutralise it as a source of conflict, we suggest that the EU seeks to convince Syria and Lebanon to refer the issue to the International Court of Justice, and to convince Israel to declare that it will respect any judgement by the Court and evacuate the area in dispute forthwith.

IRAN

85. Over the past year, Iran has come to the fore as a "player on the Arab-Israeli scene" (Dr Khalidi, Q 44), especially since Israel's war against Hezbollah in Lebanon in the summer of 2006. Iran enjoys long-standing relations with the Shi'ias of south Lebanon, from which the support base for Hezbollah is drawn, and it was Iran which first funded the creation of Hezbollah in the early 1980s to attack the American forces stationed at the time in Beirut. Iran's relations with Lebanese Shi'ias are not, according to Dr Ahmad Khalidi, a passing phenomenon, or a result of the Iranian revolution of 1978-9. The relationship between the Shi'ias of both states is centuries old, and thus southern Lebanon constitutes "a natural zone of influence for the Iranians". (Q 44)

86. The relevance for the MEPP is that this brings Iran "almost immediately onto the borders of northern Israel." (Q 44) Iran also has strong ties with Syria, based on their shared opposition to Israel and the US military presence in Iraq, and strengthened by their mutual isolation. The Alawites regard themselves as fellow Shi'as with the Iranians. Finally, Iran has built up links with both Hamas and Fatah among the Palestinians, but more especially Hamas.

87. While these alliances are a major preoccupation for Israel, especially in the wake of the Iranian-funded Hezbollah attacks against northern Israel in 2006, it is Iran's nuclear programme and its adoption of "policies that are totally destructive to what we want to achieve" that cause the Israeli government most concern (Ambassador Eran, Q 316).

88. Through the EU-3 (UK, France and Germany, with Javier Solana now in the lead), the EU's involvement in attempts to resolve the Iranian nuclear issue is clearly relevant to the EU's, and the wider international community's, relationship with Iran but Robert Cooper, Director General at the Council Secretariat, considered that relations with the Iranians should be kept separate from discussions of the MEPP: "Iran is about the only country in the region that rejects a two-state solution. So clearly they are a player, but they are one that we would rather not have involved." (Q 252)

89. A number of witnesses thought the Iranians had clearly inserted themselves into the interstices of the Israeli-Palestinian conflict, but their objectives are seen in a more negative than positive light. In contrast to Syria, for example, Iran has few concrete or strategic interests to promote or defend in the MEPP, except to act as "spoiler" to the process, especially in its refusal to accept the legitimacy of the existence of Israel. (QQ 252, 348)

90. For the EU, the priority in relation to Iran is clearly to minimise and, to the extent possible, eliminate the negative effects that Iranian regional networks, funding and arms transfers have on the prospects for peace. It is also important for the EU, however, to balance pressure with engagement with Iran in order to find a diplomatic solution to the problems posed by Iran's nuclear programme (Lord Patten, Q 373). According to Sir John Sawers of the FCO, this balance, although difficult to maintain, is beginning to pay off: "(w)hat is getting across to the Iranians is that , if they want to have a more normal relationship with the rest of the world … they have to address our concerns on issues like their nuclear aspirations." (Q 31)

91. We believe that it is important that the EU continues to engage with Iran diplomatically, but it should not allow the content of these negotiations to "leak into" or create a direct linkage to the MEPP. Iran should not be allowed to have a veto over the MEPP.

3 Recent opinion polls demonstrate strong public support for a return to a political process leading to a permanent settlement-a poll conducted jointly by the Harry S. Truman Research Institute for the Advancement of Peace at the Hebrew University of Jerusalem and the Palestinian Center for Policy and Survey Research in Ramallah, between December 11 and 16, 2006, examined a range of optional tracks for the resumption of the Israeli-Palestinian political process including the Roadmap, the 2002 Arab Peace Initiative, and an interim plan postponing the settlement of the refugees issue to the future. The findings indicate strong preference in both Israeli and Palestinian publics for the comprehensive settlement option with 58% of the Israelis and 81% of the Palestinians supporting this track compared to only 30% of the Israelis and 16% of the Palestinians supporting an interim track. [http://truman.huji.ac.il/polls.asp] Back

4 The EU Position on the Middle East Peace Process http://ec.europa.eu/external_relations/mepp/index.htm Back

5 At its Cabinet meeting on the 24th of June 2007 the Israeli Government decided "Israel will resume the transfer of tax funds, which have been collected as per agreements between Israel and the PLO and which are being held in Israel, according to a format and a timetable to be agreed upon with the emergency government and upon verification that these funds do not reach terrorist elements." Back

6 Mahmoud Abbas is also President of the PLO and the leader of the Fatah party. Back